Boeing Separates Airplane Production and Design

Boeing Co. said on Monday it is creating a new division to oversee airplane development, hiving off that function from production as it seeks to ramp up factory output.

The company named Scott Fincher, who heads Boeing's 777 jet program, to lead the new division, "airplane development," which will handle design and flight certification of planes that are currently on the drawing board. These include the 737 MAX, the 767 Tanker and 787-9, and the 777-X and 787-10X programs that have not yet formally started.

The move comes as Boeing plans to lift factory output by 25 percent over the next 18 months, and tries to develop five derivative jets to meet customer demand for longer-range and more fuel-efficient planes to better compete with Europe's Airbus.

"Successfully balancing our production and development priorities is critical to our future viability and success with customers," Ray Conner, chief of Boeing's commercial airplane business, said in a message to Boeing employees on Monday.

The new structure creates an "airlines programs" unit headed by Pat Shan, a senior vice president currently in charge of production. The division will be responsible for the profit and loss of the jet programs in production, and integrating development of new jets into production.

The division of labor "puts a specific leader in charge of future development," said Boeing spokesman Marc Birthed, and allows Shan to focus on production.

Boeing's commercial aviation services unit, which provides support for jets in service, will continue to be led by Lou Manikin, a senior vice president.

Boeing shares were down 0.4 percent at $74.00 on Monday afternoon on the New York Stock Exchange.